News / Economy

US Anti-Corruption Law Snags Major Tech Company

FILE-This Tuesday, Aug. 21, 2012, file photo, shows an exterior view of Hewlett Packard Co.'s headquarters in Palo Alto, California.
FILE-This Tuesday, Aug. 21, 2012, file photo, shows an exterior view of Hewlett Packard Co.'s headquarters in Palo Alto, California.
Earlier this month, the U.S. technology company Hewlett Packard agreed to plead guilty to bribery charges involving its Russian, Polish, and Mexican subsidiaries. 
 
Hewlett Packard admitted to the U.S. Department of Justice that it bribed Russian officials in hopes of landing a lucrative contract with Moscow’s Office of the Prosecutor General.  In Poland, HP admitted to bribery connected to contracts with the national police agency, while in Mexico, the illicit cash was tied to deals with Pemex, the state oil company.
 
What snared Palo Alto, California-based “HP” is the Foreign Corrupt Practices Act (FCPA), a groundbreaking law enacted nearly four decades ago.
 
HP’s agreement to pay US$108 million in both criminal and civil penalties is the tenth largest settlement ever under the FCPA. Other corporations that have been caught in FCPA’s net include Walmart, Halliburton, KBR, Siemens, BAE Systems, and Daimler AG.
 
Julie DiMauro, Executive Editor of the anti-corruption FCPA Blog, describes the impact upon HP for getting caught.  “The penalty amount,” she says, “might not be the true deterrent here. What could be, to it and other companies, is the ample negative publicity it is getting for its actions in multiple countries.”
 
The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter in December, 1977. It was enacted in the wake of a U.S Securities and Exchange investigation that found more than 400 U.S. corporations had collectively paid more than $300 million in bribes to foreign officials and political parties. 
 
“The passage of the FCPA itself was revolutionary,” says Sarah Pray at the good governance and accountability organization Open Society Foundations. “In an era when you could still deduct bribes from your taxes in some countries, the United States took a stand.”
 
The FCPA casts a broad shadow covering both corporations and individuals. Under the law’s provisions, anyone – regardless of nationality - is in violation of the law if they engage in bribery while in the United States.  That denies legal haven to foreigners engaging in corrupt activities offshore while in the U.S. The FCPA also applies to U.S. citizens’ financial actions overseas.  And, since 1997, it covers foreign corporations that are traded on U.S. stock exchanges and securities markets.
 
The FCPA also blocks the use of proxies to engage in illegalities.

“The FCPA’s third party liability provisions,” says Washington attorney and FCPA expert Lucinda Low, “makes it a crime to make a payment to any person, knowing that the payment or other value will be passed through in whole or in part of a foreign government official or other covered [by the FCPA] recipient.”
 
Interestingly, though, so-called facilitation or “grease” payments to foreign officials may be legal under FCPA, if done to expedite that official’s performance of duties.  And, payments to foreign officials may also be legal if the host country permits such activity.
 
Enacting the FCPA promoted a number of other nations to follow suit.   Britain passed the Bribery Act, while Canada enacted a similar law. Anti-corruption laws have been enacted in China, Thailand, Malaysia, Brazil, and many other countries. The United Nations has responded by enacting the U.N. Convention on Corruption, while the 40 state Organization for Economic Cooperation and Development (OECD) enacted, in 1997, an Anti-Bribery Convention, though the anti-corruption group Transparency International chides the OECD for not insisting its member states more aggressively enforce the provisions of that agreement.
 
While the FCPA has a broad reach, a former Justice Department FCPA prosecutor says it has a limitation – time – that needs to be changed. 

“I think there are statute of limitations issues [within the FCPA],” says Kathleen Hamann. ”A lot of complex economic crimes in the U.S. have a 10 year statute of limitations. But, the FCPA has a five year statute of limitations.” Hamann, now in private practice, adds”I think there are a lot of individuals who end up not being prosecuted because the statute of limitations has run out.” She says “I think we need to treat it [bribery and other crimes covered by FCPA] as what it is, a complex financial crime.”
 
Sarah Pray calls for the FCPA’s expansion in another direction.

“The United States should outlaw all commercial bribery, not just bribery of foreign officials. Secondly,” Pray adds, “the United States should outlaw ‘facilitation payments. The line between a bribe and a facilitation payment is a blurred one, and this distinction should be eliminated.”
 
Along with penalties for misbehavior, Lucinda Low says the FCPA has compelled the business world to become proactive. “FCPA”, she says, “created expectations that companies will institute internal programs and controls to prevent, detect, and remediate bribery and corruption throughout their organizations. “

Jeffrey Young

Jeffrey Young came to the “Corruption” beat after years of doing news analysis, primarily on global strategic issues such as nuclear proliferation.  During most of 2013, he was on special assignment in Baghdad and elsewhere with the Special Inspector General for Iraq Reconstruction (SIGIR).  Previous VOA activities include VOA-TV, where he created the “How America Works” and “How America Elects” series, and the “Focus” news analysis unit.

You May Like

Turkey's Controversial Reform Bill Giving Investors Jitters

Homeland security reform bill will give police new powers in search, seizure, detention and arrests, while restricting the rights of suspects, their attorneys More

Audio Slideshow In Kenyan Prison, Good Grades Are Path to Freedom

Some inmates who get high marks could see their sentences commuted to non-custodial status More

'Rumble in the Jungle' Turns 40

'The Champ' knocked Foreman out to regain crown he had lost 7 years earlier when US government accused him of draft-dodging and boxing officials revoked his license More

This forum has been closed.
Comment Sorting
Comments
     
by: ed
April 24, 2014 10:52 PM
Julie DiMauro, Executive Editor of the anti-corruption FCPA Blog, describes the impact upon HP for getting caught. “The penalty amount,” she says, “might not be the true deterrent here. What could be, to it and other companies, is the ample negative publicity it is getting for its actions in multiple countries.”

Thanks Julie. Actually, the true deterrent here doesn't exist, which is likely by design if those evil companies bribed local officials too in order to have the law written in a way that wouldn't present a real threat. Until the public forces government to treat the Directors of Global Money Grab Inc like it does poor people and slams their crooked butts into a cage, it will continue to be business as usual for the Government Industrial Complex. Here no evil, see no evil, speak no evil.


by: Gervazio Degan from: Joao Pessoa, Brazil
April 21, 2014 10:22 AM
I don't understand because Brazil is not cited among the countries bribed.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Victorious Secularists Face Challenge to Form Government in Tunisiai
X
Henry Ridgwell
October 30, 2014 11:39 PM
Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Victorious Secularists Face Challenge to Form Government in Tunisia

Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Africa Tells its Story Through Fashion

In Africa, Fashion Week is a riot of colors, shapes, patterns and fabrics - against the backdrop of its ongoing struggle between nature and its fast-growing urban edge. How do these ideas translate into needle and thread? VOA’s Anita Powell visited this year’s Mercedes Benz Fashion Week Africa in Johannesburg to find out.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7893
JPY
USD
107.68
GBP
USD
0.6238
CAD
USD
1.1214
INR
USD
61.185

Rates may not be current.